Tim Jarvis' speech launching the Markets Regulatory Vision and Strategy to 2030

Introduction

Good afternoon,

Ofgem was set up 25 years ago this week. Back then, one of the roles we were given was to regulate a competitive retail market. Believe it or not, that was supposed to be the easy bit. 

Energy is an essential to every household and business, but the retail part of the market is what consumers see. These are the companies we pay our bills to. So it’s not surprising that energy suppliers and our regulation of them have come under intense scrutiny.

That isn’t news for anyone in this room.  But when we are thinking about how we regulate this market for the next five years, we need to be mindful of what the history of energy retail regulation has taught us.  Many people have opined on what has gone well and what has not gone well, and why. We are, and should be, thoughtful about that and listen to the challenge that comes our way. 

We welcome the Government’s review of Ofgem and stand ready to take on new challenges and change where we need to. The energy market today looks very different from 25 years ago so we should not be surprised that the regulator might need to change as well. 

Stabilisation and recovery

The recent history of the energy retail market since the gas crisis has been one of stabilisation and recovery. The crisis saw multiple suppliers fail and the costs of those failures peaked at around £64 on an average annual household bill in 2022/23. The financial resilience regime we introduced has been the subject of much debate but has injected £7.5bn in net assets into the sector. Suppliers are now less likely to fail and consumers are less likely to pay significant costs when they do. 

We have seen similar stabilisation and recovery in the service customers receive. Suppliers struggled to cope with the volume of calls and demands on them from consumers during the crisis. Satisfaction levels fell, call waiting times and complaints soared. But suppliers have invested in systems and people, and we have seen a significant turnaround. Customer satisfaction is higher than at any time since we started tracking it, call waiting times have reduced since the crisis and complaints are at their lowest since 2020.

Similarly, prices, though higher than pre-gas crisis norms, have risen by less than the rate of inflation in the last 18 months, a real terms decrease.

Of course, there is much still to do. Bills remain high and we will continue to bear down on all the costs in the system that we control. Similarly, customer service still isn’t where it should be in parts of the market. But the context of the recent past is important for what should come next.

Now is the time to look ahead to that future.

Future strategy

Consumer-led flexibility of energy usage can bring benefits for individuals, and reduce costs overall. It’s a huge prize. It will require changes to the retail markets we have today – but those markets will play a critical role in the transition to clean energy and in maintaining public support for it. 

That change will require innovation and investment. And Ofgem’s role is to ensure we regulate in a way that supports that innovation and investment for the benefit of the consumer. 

As the energy system around us changes, so the regulator needs to change its approach to support that change. 

That is why innovation and investment are the key themes for our retail markets strategy to 2030 – to drive better outcomes for consumers – through better products, services and lower bills. We are looking afresh at how we regulate with the aim of encouraging investment and innovation – including as we take on new responsibilities for the regulation of heat networks, aggregators, and third-party intermediaries. This is how energy retail markets will support the Government’s Clean Power 2030 and growth ambitions. 

I want to set out today how we will rise to that challenge as a regulator. I am not launching new policies today; but I do want to set out the strategic approach we will adopt for the decisions we need to make in the coming months and years. We will put innovation and investability for the benefit of consumers at the heart of everything we do.

Investment

First – let me focus on what we are doing to drive investment in retail energy markets. 

Much of the debate on the need to attract investment to support electrification and clean energy focuses on generation, transmission, and distribution. But retail markets are likely to transform as much in the next few years – and we want to see investment in new products and services that improve customer outcomes, and make it simple for consumers to engage with flexibility such as time-of-use tariffs.

One of the key areas of focus for us here is improving the predictability and consistency of modest returns, so participants can invest with confidence in new products and services to consumers. We have two priorities in this area: debt and the price cap. 

Debt

First debt. It is one of the key drags on investment, with unprecedented levels of debt and arrears in the sector today. Supporting the market to bring down the levels of energy debt is a priority over the next 12 months.

Dealing with debt will:

• help those consumers who are genuinely struggling
• reduce the bills of the majority of consumers who pay their energy bills; and
• give confidence to investors that suppliers can collect the revenue they rely on

We are launching phase one of our debt relief scheme, which supports low-income households who built up unsustainable levels of debt during the gas crisis. This could help around 195,000 customers by writing off up to £500m.

Going forward, we need to prevent debt and arrears building up in the first place, including by providing the right protections and support to vulnerable consumers struggling with their bills. 

We will publish further details of this work in the coming weeks and are keen to continue working with suppliers, consumer groups, and debt charities to get this right. 

But some key outcomes to focus on are:

1. We want to see high standards of debt collection:  inevitably there will be a need for suppliers to collect debt from some consumers. Debt collection practices in this sector – that is an essential service – should be proportionate and of a high standard.
2. We want to see identification and protection of vulnerable consumers: we need to ensure that suppliers operate to a clear and workable set of rules that enable them to protect the most vulnerable in society and ensure those consumers have access to government support. To do that suppliers need to be able to identify vulnerable households. The long-term solution is data sharing with government and we will continue to work with government on this; until then, our rules should not stand in the way of suppliers validating and seeking evidence to enable them to target support and handle requests for forbearance. We will always seek to ensure that those who are struggling are treated with empathy and support.
3. We also want to prevent debt build-up at change of tenancy: Supplier data shows that between 20-40% of energy debt is built up when people move into a new property and do not set up their energy account. We need to ensure that when people move home, contacting their energy supplier is as important as, for example, connecting to broadband. We will launch trials to look at how we can encourage consumers to engage when moving into a new home.

We will publish further details of this work in our debt strategy update on 6 November 2025. 

Pricing 

The second area on investability is the price cap.

Since its introduction in 2019, the price cap has borne down successfully on profits in the retail sector and driven out the previous practices where customers who did not engage with the market paid significantly higher prices to subsidise those who did. We have also seen supplier margins reduce significantly. 

But while supplying energy and billing customers should not be a high margin business, it should be a more predictable and consistent one. Predictability of returns is a factor for investability. 

So we have addressed and updated technical parameters in the cap that were no longer fit for purpose. We continue to review these and will seek to make changes where we believe appropriate to do so.

We also want to provide more certainty about how suppliers recover costs, particularly those that are outside their control. Some of those costs result from decisions by Ofgem and some from decisions by government. But collectively we need to get better at providing predictability for suppliers on costs and certainty on recovery. 

And of course, as we move forward, we will be looking at reforms to the price cap to accommodate market wide half hourly settlement, with investment and innovation in mind of course. 

The amount people pay for their energy in the future will depend as much on when they consume it, how energy efficient their property is, and what access they have to low carbon technology. We think these opportunities should be available for all and we want to create a market where suppliers are incentivised to innovate and provide the best deals for their customers.

Of course, this requires those in vulnerable circumstances to be protected, and we will continue to work with government to ensure support is targeted at those most in need. The price cap should sit alongside and complement government support for those struggling to pay their energy bills. 

Interaction between our regulations

As well as the predictability and consistency of returns, we are acutely aware that it is the combination of all of our regulation that can affect investability. 

That’s exactly why we are committed to reviewing our new financial resilience regime, to ensure it is effective and proportionate. And we will be considering its interaction with other policies and regulations, such as the price cap and consumer protection rules (more on that shortly). 

We know that we also need to take a strategic approach to what are separate, but ultimately interdependent, cost and pricing challenges, such as:

• how costs are allocated and feed through to consumer bills
• how we can protect those who don't engage with the market
• and how we can help government protect those who cannot afford their energy bills

In each of these pieces of work we will be looking at how our rules interact and what this means for the investability of the market. In doing so, we will work closely with government where it holds the levers. 

Innovation

Now turning briefly to innovation. 

The last couple of years has seen new products and services: 

• Time-of-Use tariffs
• offers such as cheaper energy at weekends
• integration of low carbon technology to offer zero bill homes; or
• trials with low-income households to subsidise battery and solar

We want to encourage more of this type of innovation and ultimately the mass take-up of simple, affordable ways to take advantage of demand flexibility. We also want to see innovation on other aspects of the consumer experience such as those that reduce bills, particularly for those on low incomes. We need to create the space to encourage that innovation and I am keen that we listen and respond quickly if our regulation is stifling that innovation without good reason. Part of that is about encouraging investment; but it is also about the way we regulate.

Suppliers tell me they feel constrained by regulatory obligations, and I want to be clear that I recognise that in many areas, the level of prescription of regulation in the retail market has increased. 

Our Consumer Confidence programme aims to revisit the rule book, setting and agreeing the outcomes that we, and consumers, expect of suppliers. To reduce the regulatory burden whilst also driving improvements – particularly for non-domestic and vulnerable consumers where satisfaction levels lag behind

How we regulate for those outcomes and how suppliers are incentivised to meet them is what is important.

I want to ensure that we provide the space for suppliers to innovate to meet those outcomes, reducing the burden of overly prescriptive regulation where it cannot be justified – while maintaining important protections for consumers.

We will likely continue to offer as much clarity to suppliers as we can when it comes to protection of the most vulnerable.

But in large areas of the supply licence, we think there are opportunities to simplify and reduce regulatory burden and we are keen to work with the industry and consumer groups to do so. 

Ultimately consumers will benefit from suppliers that are focused on good outcomes for their customers rather than taking a tick-box approach to complying with a prescriptive rule book. We will learn from the approach we take with regulating heat networks, aggregators and Third-Party Intermediaries – where we will need to take a more outcomes and data-driven approach due to the number of providers we are regulating. 

Next week [10 November 2025] we will publish a consultation on the next stage of our work on the Consumer Confidence programme. We also have decisions to make in the coming weeks on guaranteed standards of performance relating to smart meters. And the rules that we apply to those offering services to consumers involving the aggregation of demand that can be traded in markets. 

In each we will be considering the implications of our decisions on innovation and investability and considering the best way to protect consumers without imposing unreasonable or unnecessarily duplicative regulatory burden.

Conclusion 

There is significant change coming in energy markets and that presents opportunities and challenges to the retail market. We are committed to evolving our approach to adapt to that change.

The energy retail market should be an exciting place to invest in over the next few years and the benefits to consumers should be considerable. I am committed to ensuring we play our part as regulator in driving investability and innovation in retail markets to support that future.

I look forward to working with Government, consumer groups, and those serving consumers to bring it about. 

Thank you.